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How Did the Average 401(k) Close Out 2015?

Average 401(k) balances drifted lower in December, with stumbling markets overcoming the positive impact of contributions.

The nonpartisan Employee Benefit Research Institute (EBRI) estimates that the average account balance of younger, less-tenured workers (i.e., age 25-34, with 1-4 years of tenure) slipped 0.7% in the last month of 2015, cutting into November’s 1.6% increase. The average balance of older workers, notably those age 55-64 with 20-29 years of tenure, slid 1.8%, overwhelming the prior month’s 0.1% gain.

U.S. stocks ended the year with their worst annual performance since 2008, with the Dow Jones Industrial Average off 2.2% in 2015, while the broader S&P 500, after three years of double-digit gains, slipped 0.7%, though the tech-laden Nasdaq Composite Index rose 5.7%.

The first month of the last quarter had seen much stronger performance among those average 401(k) balances, with the younger, less-tenured group registering a 7.8% surge in October, while the older, more tenured group enjoyed a 5.2% increase, according to EBRI’s estimates.

Older, higher tenured participants tend to have larger account balances, and the movement in average balance tends to be more influenced by market moves, while the accounts of younger, less tenured workers are more likely to be influenced by contribution flows.

The EBRI/ICI database includes demographic, contribution, asset allocation and loan and withdrawal activity information for millions of participants. EBRI has produced estimates of the cumulative changes in average account balances — both as a result of contributions and investment returns — for several combinations of participant age and tenure.

You can access reports of both cumulative and monthly average account changes here.

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